Rieter Textile Systems posts positive operating result
The Rieter Group reported a striking improvement in all key statistics for the 2010 financial year and returned to profit earlier than originally forecast. Following two years of adverse economic conditions, in the second half of 2009 signs of recovery emerged in both industrial sectors in which Rieter operates. The favorable market trend in the textile machinery and automotive component supply businesses then continued throughout the year under review. This was driven mainly by improved consumer sentiment in Europe and North America as well as sustained economic growth in large Asian markets.
As a leading supplier to the textile and automotive industries, Rieter participated in the upswing by virtue of attractive products which had been systematically prepared for market launch during the years of crisis. The Rieter Group recorded a striking increase in orders received and sales in the year under review. Both divisions reported positive operating results, and the group posted a profit.
Striking increase in orders received and sales
New orders received by the Rieter Group in the 2010 financial year were 64% higher (68% higher in local currencies) at 3 170.0 million CHF (1 935.1 million CHF in 2009). The trend in order intake was dynamic throughout the year. The steep rise compared with the previous year was due primarily to extremely strong demand at Textile Systems.
The 32% increase (+ 36% in local currencies) in sales by the Rieter Group was less than the growth in orders received due to the low order volume in the previous year. Sales in the second half were slightly higher than in the first six months and totaled 2 585.8 million CHF (1 956.3 million CHF in 2009). Exchange rate trends adversely affected both key statistics, especially in the second half. Based on exchange rates prevailing in 2007, consolidated sales would currently already be 2.9 billion CHF again.
Disproportionate increase in the operating result
The Rieter Group posted an operating result before interest and taxes (EBIT) of 98.0 million CHF in 2010. This is equivalent to 3.9% of corporate output. The Textile Systems Division made the largest contribution to this by virtue of volume. In the previous year the Rieter Group had reported a negative operating result of – 186.6 million CHF.
The substantial improvement was due largely to good utilization of capacity and a favorable cost structure with a significant lowering of the breakeven point, which both divisions achieved in the years of crisis. In the context of restructuring and cost-cutting programs manufacturing capacity was reduced in North America and western Europe, the establishment of facilities in new markets was accelerated and activities which did not form part of the core business were sold.
These programs and projects were continued despite the upswing and have been largely completed. These actions will result in further cost reductionsin the 2011 financial year. Rieter will be able to respond with greater flexibility to future changes in demand such as those experienced in 2008 and 2009.